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    Financial Freedom: A Guide for Personal Finances
    Financial Freedom: A Guide for Personal Finances
    Financial Freedom: A Guide for Personal Finances
    Ebook192 pages2 hours

    Financial Freedom: A Guide for Personal Finances

    By Merlon Harper

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    About this ebook

    Most people make simple mistakes that kill their chances of living a life defined by financial freedom.

    One of the big reasons is they dream big, but they fail to comprehend how significant a role money plays in achieving those dreams. The reality is that building a solid foundation of how finance works is usually the first step to getting what you want.

    Written in straightforward language, this guidebook to understanding money gives you the tools and insights you need to:

    • navigate college without taking out too many loans;
    • pay off debt you’ve already acquired;
    • use credit cards and bank accounts responsibly;
    • boost a lagging credit score;
    • decide what type of insurance you need.

    Filled with charts, graphs, and examples of how managing money right can pay off big, this guide is a must-have for anyone seeking to make smart decisions. Leave debt in the past, and start reaping the rewards that go along with Financial Freedom.
    LanguageEnglish
    PublisherLulu Publishing Services
    Release dateAug 24, 2015
    ISBN9781483434544
    Financial Freedom: A Guide for Personal Finances

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      Book preview

      Financial Freedom - Merlon Harper

      dreamstimel31470492.jpg

      FINANCIAL FREEDOM

      dreamstimel31470492.jpg

      A GUIDE FOR PERSONAL FINANCES

      MERLON HARPER

      Copyright © 2015 Merlon Harper.

      All rights reserved. No part of this book may be reproduced, stored, or transmitted by any means—whether auditory, graphic, mechanical, or electronic—without written permission of both publisher and author, except in the case of brief excerpts used in critical articles and reviews. Unauthorized reproduction of any part of this work is illegal and is punishable by law.

      This is a work of fiction. All of the characters, names, incidents, organizations, and dialogue in this novel are either the products of the author’s imagination or are used fictitiously.

      ISBN: 978-1-4834-3453-7 (sc)

      ISBN: 978-1-4834-3455-1 (hc)

      ISBN: 978-1-4834-3454-4 (e)

      Library of Congress Control Number: 2015910929

      Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

      Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

      Certain stock imagery © Thinkstock.

      Lulu Publishing Services rev. date: 10/21/2015

      CONTENTS

      Dedication

      Foreword

      Introduction

      Chapter 1   Money and Banking

      Chapter 2   Building Wealth with a Higher Credit Score

      Chapter 3   Getting out of Debt

      Chapter 4   Saving and Investing Money

      Chapter 5   Purchasing a Vehicle

      Chapter 6   Buying a Home

      Chapter 7   Protecting Your Assets and Income

      Chapter 8   Plan for Retirement

      Chapter 9   Estate Planning

      Chapter 10   Managing Your Taxes

      About the Author

      References

      dreamstimel48318817.jpg

      DEDICATION

      I’m dedicating Financial Freedom to my mother; she was the first person to expose me to valuable financial concepts that have served me well. In her own way and in her own lingo, she taught me how to master the five elements of the FICO credit score. She always said, Pay your bills on time, and you will always get credit. She was a master at manipulating and leveraging credit to her benefit; she had to be in order to keep her family of nine fed and clothed after my father died. All the retailers in our town were ready and willing to offer her credit. I understood later that it was because she didn’t pose a risk to them; she always met her obligations in a timely manner. I’m amazed at how she calculated and strategized financial moves, ensuring that she was never overextended. Thanks, Mom; you are my inspiration and my idol.

      I also want to thank my husband, who encouraged me to write this book. He understands how crucial early financial literacy is and how important it was for me to write Financial Freedom. I want to thank my children, Lawrence and Keallah, they provided me with the canvas for Financial Freedom.

      FOREWORD

      Financial literacy is critical early in life, as it helps us develop a certain mind-set that will last a lifetime. We tend to prepare for the workforce but not for the financial world. However, everyone should understand important financial concepts for the complex world we live in; everyone should have a solid foundation in finance in order to think critically, weigh risks, and make informed financial decisions.

      Personal finance, as the name implies, is often considered personal and, therefore, is not always something parents share with their children. We don’t want to share the burden of finances with our children, because we want to shelter them from the complicated world of finance.

      There are programs that teach children to open bank accounts and save their allowances, but little attention is devoted to explaining financial outcomes of actions or inaction. Financial Freedom provides information and examples that will allow you to analyze information so that you may grasp the larger conceptual context of finance and gain a greater understanding of the financial world.

      There are countless adults who are able to make living wages but don’t understand the relationship between their FICO scores and renting an apartment, owning a home, or paying more for credit. So many are—or will become—unbanked or underbanked, always paying more for goods and services because they don’t understand the consequences of mishandling a checking account or a low credit score. What you don’t know can hurt you. Financial Freedom can help you build wealth, make informed financial decisions, and thrive in our free-enterprise system.

      INTRODUCTION

      Everyone will become a consumer at some point in his or her life, and almost everyone will need to make some financial decisions, but often we aren’t prepared. Consumer actions and financial decisions have major impacts on our lives. If you make bad decisions, you may become a statistic, part of the millions of Americans who are deeply in debt, underbanked, and undersaved, with a thwarted road to achieving financial freedom and your American dream.

      We can all benefit from understanding personal finance; it can provide extra armor against unscrupulous business practices and prepare us to survive and thrive in our free-enterprise system. Whether you are a millionaire businessperson or a secretary earning $30,000 a year, personal-finance knowledge can help you reduce your debt, build wealth, and know your consumer rights and options.

      Unfortunately, financial management is often limited or left off the school curriculum. Considering the estimated billions in interest and fees paid in 2013 by millions of underbanked and unbanked Americans, personal finance should be a required subject in every school. Check-cashing and similar companies have created a profitable market, easily dangling attractive bait to the underbanked, taking advantage of their positions. Similar in fashion, car-title loans cost the undersaved consumer an estimated $3.6 billion a year in interest generated from $1.6 billion in loans; that’s $2 billion in gross profits. As of 2013, twenty-six states continue to allow predatory lending practices, despite the fact it derails the economic security of vulnerable Americans. Predatory lending is defined by the Federal Deposit Insurance Corporation as imposing unfair and abusive loan terms on borrowers.

      Payday loans operate under a similar premise, with companies charging 300 percent or more in interest—in 2012, profits from payday loans amounted to approximately $45 billion. An alarming statistic for 2015 shows the average American household credit card debt at $15,609. A 2013 survey conducted by Bankrate.com found that 27 percent of Americans had no emergency savings, essentially living from paycheck to paycheck. Fifty-eight percent of preretirees don’t have a retirement plan, and those near retirement have an average of only $25,000 saved, barely enough to support them through one year of retirement. Most Americans will become taxpayers but find the law too complex to prepare their tax returns. They may turn to unscrupulous tax-return preparers or make costly tax decisions, leaving them with large debts that force them to wait years to retire.

      Obtaining a good post–high school education or skill certainly has the potential to propel you into a good financial status. Without a skill or education, it may be difficult to financially succeed. Unskilled-labor jobs have been declining in the United States for years; more companies are outsourcing unskilled jobs to other countries because it’s cheaper and increases their bottom lines.

      It has been said that the amount of wealth you can accumulate is directly linked to your education and career decisions. This is true to a large extent; the more education you have, the more you can expect in salary, and some careers pay more money than others. So think about your career choices, and challenge yourself by investing in your future and future earnings.

      According to the National Center for Education Statistics, without a high-school education, you can expect to earn a median salary of about $23,900, not enough to support a family in a middle-class lifestyle. The median salary with a high-school diploma is about $30,000; with an associate degree, $37,500; and a bachelor’s degree, $48,500. A master’s degree can hit the mark of $59,600. Professional degrees can command even more.

      But don’t let the cost of your education take you off the path of financial freedom. It could mean the difference between surviving and being financially free. Most graduates don’t fully understand the gravity of student-loan debt on their futures. In 2013, there were approximately forty million Americans with a combined student-loan debt of $1.2 trillion. A student loan can impact your life for years. Some borrowers have obligations for as long as thirty years. Senator Marco Rubio owed more than $100,000 in student loans when he was sworn into office in January 2011, and President Barack Obama retired his student-loan debt just before his election as the forty-fourth president of the United States.

      Borrowers can’t charge off or eliminate student-loan debt in bankruptcy, and wages can be garnished for payments. President Obama recognized the burden student loans carry, so he decided to move forward with a plan in 2014 to introduce policy aimed at easing the burden for millions of new student-loan borrowers. His proposal limits the maximum payment to 10 percent of the borrower’s income and the ability to discharge unpaid debt after twenty years—or after ten years, if they provide certain government services.

      Consumer expert Clark Howard has a rule of thumb; that is, you should not borrow more for a four-year degree than the entry-level salary you expect to make. There are other ways you can get a degree without long-term debt:

      • Consider two years of community college before entering a four-year college; it’s cheaper.

      • Pay as you go; work part-time to pay your tuition or a portion of it.

      • Apply for scholarships—athletic, academic, and so forth.

      • Finish your matriculation early to eliminate the cost of additional semester expenses.

      • Decide early which field of study you wish to pursue, avoiding a costly program change.

      Making a ton of money doesn’t necessarily equate to building wealth; it’s only one factor. Take the rapper M. C. Hammer, who coined the phrase Can’t touch this. He earned $33 million in 1990 and declared bankruptcy in 1996 with $13.7 million in debts. In the same year, film star Burt Reynolds filed for bankruptcy. In 2003 Mike Tyson, the notorious professional boxer and the youngest to win and hold

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